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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Thursday, 28 July 16
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- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Planning Commission, India
- The University of Queensland
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
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- Bangladesh Power Developement Board
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- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
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- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
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- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
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- Vedanta Resources Plc - India
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- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
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- Mercuria Energy - Indonesia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
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